The fixed and variable costs can then be used to forecast the total cost at any level of activity.

1. The high-low method has the enormous advantage of simplicity.

2. It is easy to understand and easy to use.

3. It assumes that activity is the only factor affecting costs.

4. It assumes that historical costs reliably predict future costs.

5. It uses only two values, the highest and the lowest, so the results may be

distorted due to random variations in these values.

Discuss and explain each statement and justify that high-low method is best or worst method for cost

estimation. 2 lines each